Page 35 - Axiom Mining Limited 2012 Annual Report

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2012 Annual Report
General Mineral Operation Risks
The business of the Company may be disrupted by a
variety of risks and hazards, which are beyond the
control of the Company, including sovereign or political
risks, environmental hazards, industrial accidents,
technical failures, labour disputes, unusual or unexpected
rock formations, severe seismic activity, flooding and
extended interruptions due to inclement or hazardous
weather conditions, fire, explosions, customs and port
delays. These risks and hazards could also result in
damage to or destruction of mining facilities, personal
injury, environmental damage, business interruption,
monetary losses and possible legal liability.
Development Capital Costs
Should the Company be successful with exploration, the
capital cost of the Company’s future mine development
could vary with changes in a variety of factors,
including exchange rates which affect imported capital
equipment prices, geological and technical conditions
encountered during drilling and mine development,
and the construction of new production facilities. A
substantial development cost overrun could have a
material adverse effect on the Company. At the current
stage of development of the Company’s operations, mine
development and production related risks are low but this
is expected to change over the next one to two years.
Resource Estimates
In this report and in future reporting by the Company,
references to reserves and resources and their
classifications, are in accordance with the Australasian
Code for Reporting of Mineral Resources and Ore Reserves
“JORC Code”
). Estimates are expressions of judgement
based on knowledge, experience and industry practice.
Estimates, which were valid when made, may change
significantly when new information becomes available.
In addition, resource estimates are necessarily imprecise
and depend to some extent on interpretations, which may
ultimately prove to be inaccurate. Should the Company
encounter mineralisation different from that predicted
by past drilling, sampling and similar examination,
resource estimates may have to be adjusted. This
adjustment could affect development and mining plans,
which could adversely impact the Company.
Title Rights
There is no guarantee that any tenement applications
or conversions in which the Company has a current or
potential interest will be granted. Tenement applications
may require the Company to commence negotiations
with relevant government body, minister or official,
landholder, and, in Australia, Vietnam and Solomon
Islands, indigenous representative bodies to gain access
to the underlying land. There is no guarantee that such
negotiations will be successful or that having been
successful the Company will not be challenged by third
parties as it is currently in the Solomon Islands.
Also, due to its exploration activities in Queensland, the
Company must observe its “duty of care” under Aboriginal
Cultural Heritage Act 2003 (Qld) to ensure that its activities
do not harm Aboriginal cultural heritage.
Price Volatility
Most of the Company’s revenues from any successful
exploration and mine development will ultimately be
derived from sale of metals. Consequently, the Company’s
expected earnings will be closely related to metal prices.
Metal prices fluctuate and are affected by numerous
factors beyond the control of the Company. These factors
include world demand, forward selling by producers, and
production cost levels in major metal-producing regions.
Metal prices may also be affected by macro-economic
factors such as expectations regarding inflation, interest
rates, and global and regional demand for and supply
of metals as well as global economic conditions. These
factors may have an adverse effect on the Company’s
exploration, development and production activity as well
as its ability to fund these activities. The Company will
consider developing a suitable hedging strategy as and
when appropriate.